Short Term Gains
For the last century or so, the US has been regarded as the leader of the world. The biggest world superpower, and no other country was close. They had strong allies, a powerful economy, and a strong military, which is essentially everything you want in a country. Now, it’s not like any of those have changed. Instead, a fierce competitor has come to challenge: China.
Putting geopolitics aside, the economic rivalry between the two countries has been interesting. For the last few decades, the US has been able to keep the advantage, but China’s economy has been growing at a rapid rate since the 1990s, which puts us behind in the future. However, we have seen some short-term gains. In the second quarter of 2021, the US outpaced China in GDP growth due to the different pandemic responses. China placed a hard lockdown at the beginning, leading to a drop in GDP, but ever since, their economy has gone back to normal. The US has put lots of government aid through stimulus, which has worked so far. Analysts expect this trend to continue for the next 5 quarters, which would be the first time the US has beat China in GDP growth for consecutive quarters since the century began. Unfortunately, this is just short-term success, and analysts still expect China to take over in a couple of years unless things change rapidly. Still, GDP isn’t everything, and other economic indicators show that China still has a long way to go. What do you think about this short-term success?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
